Cameron calls on EU for 'credible deal' to keep Britain in

BRUSSELS (Reuters) - Prime Minister David Cameron appealed to EU leaders on Thursday to help him settle the question of Britain's European Union membership for a generation by agreeing a "credible" deal he can sell to the British public to stay in the bloc.

But after a first round of talks at a two-day summit on renegotiated terms for Britain, UK officials voiced frustration at a lack of practical concessions by partners who are wary of Cameron's bid to side-step EU regulation and cut immigration.

"I would say the going is tough, this could be a long night," a British official told reporters.

"While many countries were saying they want to help, they want to make sure they keep Britain in the EU, there wasn't much sign of how they are planning to do that in practice, not showing much room for maneuver," the official said.

Diplomats from other countries said no new obstacles had arisen in a 2-1/2-hour session in which most of the 28 leaders set out their national positions, and there was little reason to doubt a deal would be worked out by Friday afternoon.

Many leaders said they were felt a historic turning point for European integration. No country has ever voted to leave the Union, and a British exit could deal a blow to the UK economy and certainly damage the EU's standing and self confidence.

Summing up how many saw the evening talks playing out, Lithuanian President Dalia Grybauskaite said: "I think everybody will have his own drama. And then we will agree."

Prime Minister Enda Kenny, who fears Brexit would be deeply harmful to Ireland, urged leaders to help Cameron. He told peers according to one participant: "You all have your problems but no one has bigger problems than David. He’s got half his cabinet against him, he’s got half his party against him.

"We have to give him a deal he can take home and sell to the British people."

The Irish leader quoted English playwright William Shakespeare's Scottish king Macbeth to press for a speedy conclusion. He told them: "If it were done when 'tis done, then 'twere well it were done quickly."

Cameron plans to put the result of his renegotiation to a high stakes referendum perhaps as early as June 23 that will determine whether Europe's second biggest economy and one of its two main military powers stays in the EU.

How far the reform package will sway voters either way is unclear. Cameron's left-wing Labour opponent, Jeremy Corbyn, was also in Brussels where he echoed Conservative euroskeptics in describing the likely immigration deal as a "theatrical sideshow". But Labour plans to campaign to remain in the bloc.

The leaders were working to overcome differences on the most contentious areas of Cameron's demands for financial safeguards and curbs on some benefits for EU migrant workers in Britain.

"The question of Britain's place in Europe has been allowed to fester for too long and it is time to deal with it," Cameron told them at the first working session.

"If we can reach agreement here that is strong enough to persuade the British people to support the UK's membership of the EU then we have an opportunity to settle this issue for a generation," he said, describing the new relationship as a flexible one that allows countries to "live and let live".

France and Germany sought to ensure Britain would not obstruct further euro zone integration or let its banks duck EU financial regulations. East European countries sought to limit reductions in benefits for their nationals. And Belgium demanded a guarantee that this would be the last British renegotiation.

Under pressure from business to settle the matter and end uncertainty that has weighed on markets and companies, and with opinion polls suggesting the 'out' campaign is gaining ground, Cameron wants to hold the vote as soon as possible.

MERKEL

EU leaders are also eager to turn to more pressing concerns, such as the refugee crisis which was the other main agenda item in Thursday's summit discussion.

German Chancellor Angela Merkel said that despite some obstacles remaining, she had "the attitude that we gladly want to do everything to create the conditions so Britain can remain a part of the European Union".

French President Francois Hollande also said he wanted Britain to stay in the EU but not to the detriment of the EU.

Cameron has spent weeks touring Europe seeking agreement on his reforms, so he can hold a referendum and try to put to rest the divisions over Europe that have dogged his party for years.

He has encountered resistance on the way, with some officials tired that Britain wanted to deepen its 'semi-detached' status from the EU - it is not in the 19 member euro zone and has not signed up to the open borders Schengen area.

ENGLISH BREAKFAST PLANNED

EU officials have said some leaders are still concerned that Cameron's demands will encourage other countries to ask for changes to their membership agreements. But a new draft signaled that, especially on migration, any solution would be tailor-made to take note of Britain's specific welfare system.

There will be debate over the wording of the safeguards for London's financial sector - which France fears could give Britain an advantage - on future amendments to the EU's founding treaties, and on how long Cameron can curb welfare payments.

East European nations balked at Cameron's welfare plans, saying they discriminated against their citizens. Some leaders suggest there may be compromise on some points.

But there was little movement on one issue: the provision of welfare payments for children abroad of parents living in Britain. Britain wants these indexed to prices in the countries where the children live, but several countries are concerned that this would be adopted by other wealthier nations.

With the prospect of late-night talks, summit chairman Donald Tusk has scheduled an "English breakfast" on Friday. An aide said it might turn into an "English brunch" if talks drag.